The Low Down on Robo-Advisor

The trend toward online investing and advisory services, also known as robo-investing and robo-advice is gaining momentum, but industry participants are struggling to get a handle on how retail investors view and/or use robo-services to conduct their financial affairs.

Studies Abound

Recent research conducted by major asset management firms has given some insight, yet often their findings turn up inconsistent information. For instance, one study led by State Street Center for Applied Research found that 65% of retail investors believe that technology will do a better job at meeting their needs than human advisors.1 Other research conducted by Allianz Life®, which focused on generational approaches to investing and managing finances, revealed more complex attitudes.

Case in point: When baby boomers and Generation X’ers were questioned about using robo-advisors, a substantial majority (69%) from both demographic groups said they “don’t really trust online advice.” Further, 76% opined that “there is so much selling online that it’s hard to trust the financial advice.”2 The same study exposed that while more than a third of respondents voiced some interest in working with a robo-advisor, just one in 10 would be comfortable having a relationship with an advisor that existed solely online.2

Though as technology evolves & financial data proliferates online, investors are spending more time on financial websites, with 40% saying they visit such sites regularly, 13% go to financial sites daily, and 22% do some trading online. Among this group there appears to be a growing comfort level with the robo-experience, as 42% stated that “there’s nothing a financial advisor can tell me that I can’t find out online.”2

A Push-Pull Message

Indeed, study after study on the evolving impact of digital advice is finding widespread contradictions on the part of investors. On one hand, they are increasingly comfortable with getting their financial information and conducting more business through digital channels, while on the other, they still gravitate toward personal relationships when dealing with complex “big picture” planning matters such as satisfying their income needs in retirement & setting and handling other long-term financial goals. Still, in its early stages, the world of Web-based financial services will undoubtedly evolve and present exciting new developments in the future.

If you are looking to experience having a live human & CERTIFIED FINANCIAL PLANNER ® provide holistic financial planning advice versus a robo-advisor with a call center helpline contact us today and we can assist with your financial needs.

This communication is not intended to be investment advice and should not be treated as such. Each individual’s situation is different. You should contact your financial professional to discuss your personal situation.

Author: Kevin H. Foster, CFP®

I am a principal and co-founder of Wealthnest Planners, located in Chandler, Arizona. As a CERTIFIED FINANCIAL PLANNER™, I specialize in investment services, retirement planning, estate planning, tax planning, and insurance. Email me or give me a ring if I can be of assistance, (480) 699-5275. Click here to read a full bio.